US FED / TREASURY LIQUIDITY — WEEKLY MEMO
Week Ending 2026-07-10
Plumbing stays bullish for a third straight week -- bank reserves jumped +$60.4B on a further $58.1B TGA drawdown -- but Treasury has now signaled bigger bill auctions ahead to rebuild cash toward the $1T late-July target.
URLI Score
+31.75
Mildly supportive
Net Liquidity
+$59.1B
Meaningful injection
Bank Reserves
+$60.4B
Reserve build
TGA Change
-$58.1B
Cash injection
RRP Change
+$10.0B
Cash parked
Fed Regime
Hold
3.50%-3.75%
Treasury Outlook
Bill/coupon issuance
Liquidity risk
Market Bias
RISK ON
Supportive
Executive Conclusion
Supportive
- Net liquidity rose an estimated +$59.1B as the $58.1B TGA drawdown and a modest $11.0B Fed balance-sheet increase outweighed the $10.0B RRP build.
- Bank reserves jumped +$60.4B to $3.14T, remaining ample; funding markets stayed exceptionally calm, with SOFR-IORB averaging -5bps, the most negative reading in recent weeks.
- Risk assets extended their rally: the S&P 500 rose +1.2% to a fresh closing high near 7,575, the Nasdaq gained +1.7%, and BTC climbed +2.4% to ~$64.1K; HY spreads tightened a further -4bp to 2.70%.
- Japan's May M2 confirmed +2.5% YoY growth (new data point this week), and US M2 growth held at +5.6% YoY.
Restrictive
- TGA at $749.2B is now roughly $250B below Treasury's own ~$1T late-July cash target, and Treasury has confirmed plans for marginal bill-auction-size increases across the curve in July specifically to rebuild it -- a real issuance headwind that has not yet shown up in the TGA level itself (Treasury Outlook score cut to -30 from neutral).
- Market-implied Fed hike odds have hardened since last week: fixed-income markets now see a September hike as more likely than not, even though the Fed itself made no new moves this week and the June dot plot is unchanged.
- The 10-year yield rose a further +5bp to 4.54%, keeping the Dollar/Yield Pressure score at 0 even as the DTWEXBGS print remains stale due to the ongoing H.10 publication lag.
- The ECB's balance sheet fell a sharp -EUR134.2B this week (quarter-end unwind), the largest weekly drop in months -- a reminder that global central-bank liquidity is still net-contracting even as US plumbing eases.
- Gold pulled back -1.2% to ~$4,121, extending its retreat from January's record highs.
Main Warning
- Two straight weeks of TGA drawdown plus record-calm funding markets are propping up the plumbing picture, but Treasury has now explicitly signaled a bill-issuance-led cash rebuild for July and market-implied hike odds for the September FOMC have risen past 50%. Watch the July 14 CPI print, this week's bill auctions (13-week/26-week July 13, 6-week July 14), and the ~$119B in Note/Bond settlements landing July 15 as the next test of whether this reprieve holds into the July 28-29 FOMC.
POSITIVE URLI +31.75 — Mildly supportive.
WEEKLY LIQUIDITY MAP
Liquidity Waterline
Every node is a water tank: the solid fill is this week's level, the dashed line is last week, and the faint line is the 3-month average. Funding sources feed net liquidity, which flows through the risk gate to crypto markets. Fill colour marks liquidity effect, not raw level.
Funding Sources
TGA-$58.1BADD
Fed B/S+$11.0BADD
Reserves+$60.4BADD
RRP+$10.0BDRAIN
Net Liquidity
US Net Cash+59.1BADD
Risk Gate
Risk AssetsURLI +31.8ADD
Crypto Markets
Crypto Beta$2.27TNEUTRAL
Meme Beta$26BDRAIN
AddDrainWatchNeutralLast week3-month avg
Liquidity tanks update weekly (Fed H.4.1 / FRED · as of Jul 10, 2026). Crypto & meme market cap and read use the weekly report snapshot (CoinGecko · as of Jul 11, 2026). Homepage and latest weekly memo use the same Waterline snapshot. AI-readable: JSON · Markdown.
What Changed This Week
| Item | Previous | Latest | Change | Impact |
|---|---|---|---|---|
| Fed total assets | $6,724.6B | $6,735.6B | +$11.0B (+0.2%) | POSITIVE |
| Bank reserves | $3,077.0B | $3,137.4B | +$60.4B (+2.0%) | POSITIVE |
| TGA | $807.4B | $749.2B | -$58.1B (-7.2%) | POSITIVE |
| RRP | $338.4B | $348.5B | +$10.0B (+3.0%) | NEGATIVE |
| Fed rate path | — | hold with hike risk | 3.50%-3.75% | NEGATIVE |
| Dollar / yields | — | yields up modestly (+5bps); dollar flat (stale H.10 print) | Broad USD 120.69 (FRED/H.10 DTWEXBGS, 2026-07-02 -- latest available; H.10 has not yet posted a print through the July 10 week-ending date, so both endpoints of the weekly comparison fall on 2026-07-02, giving a flat +0.000% reading) | POSITIVE |
Previous week: 2026-07-03 (H.4.1 weekly levels).
Fed Balance Sheet Detail
| Indicator | Latest | Weekly Change | Read |
|---|---|---|---|
| Fed total assets | $6,735.6B | +$11.0B (+0.2%) | POSITIVE |
| Securities held outright | $6,453.5B | +$10.5B (+0.2%) | POSITIVE |
| Treasury securities | $4,502.7B | +$10.5B (+0.2%) | POSITIVE |
| Bank reserves | $3,137.4B | +$60.4B (+2.0%) | POSITIVE |
| Discount window | $5.8B | -$2.0B (-25.8%) | POSITIVE |
H.4.1 levels in millions of dollars for Wednesday July 8, 2026 (release dated July 9, 2026). WALCL (total assets), WRBWFRBL (bank reserves), WDTGAL (TGA), and WLRRAL (RRP) verified against FRED (FRED date: 2026-07-08). Securities held outright (WSHOSHO), Treasury securities (TREAST), MBS (WSHOMCB), and primary credit/discount window (WLCFLPCL) also cross-verified against FRED for 2026-07-08, all exact matches. Reserve Bank credit ($6,685,539M, +$8,423M vs. the prior week's $6,677,116M) and the Net portfolio holdings of MS Facilities 2020 LLC ($628M, +$2M) read from the official H.4.1 release page Table 1 (no distinct keyless FRED series identified for reserve bank credit this run).
Net Liquidity Calculation
Net Liquidity Change = Fed Balance Sheet Change - TGA Change - RRP Change
| Component | Weekly Change | Effect | Notes |
|---|---|---|---|
| Fed balance sheet | +$11.0B | POSITIVE | Balance-sheet growth adds liquidity. |
| TGA | -$58.1B | POSITIVE | TGA up pulls cash into Treasury; TGA down injects it. |
| RRP | +$10.0B | NEGATIVE | RRP up parks cash at the Fed; RRP down releases it. |
| Net liquidity | +$59.1B | MEANINGFUL INJECTION | Sum of the three flows above. |
URLI — US Risk Liquidity Index
URLI = 0.35 x Net Liquidity + 0.20 x Bank Reserves + 0.15 x Fed Rate Path + 0.10 x Treasury Outlook + 0.10 x Funding Stress + 0.10 x Dollar/Yield Pressure
| Component | Weight | Score | Contribution |
|---|---|---|---|
| Net Liquidity | 35% | +75 | +26.25 |
| Bank Reserves | 20% | +70 | +14.00 |
| Fed Rate Path | 15% | -50 | -7.50 |
| Treasury Outlook | 10% | -30 | -3.00 |
| Funding Stress | 10% | +20 | +2.00 |
| Dollar / Yield Pressure | 10% | +0 | +0.00 |
| Metric | Value |
|---|---|
| Weekly URLI | +31.75 |
| 4-week moving average | +6.94 |
| 13-week moving average | -3.38 · 4 of 13 reconstructed (4-week MA is fully live) |
Observed URLI history
| Week | URLI | Net Liquidity | Reserves | TGA | RRP | Read |
|---|---|---|---|---|---|---|
| 2026-07-10 | +31.75 | +$59.1B | +$60.4B | -$58.1B | +$10.0B | MILDLY SUPPORTIVE |
| 2026-07-03 | +36.75 | +$81.5B | +$122.6B | -$94.5B | +$1.9B | POSITIVE |
| 2026-06-26 | +25.75 | +$53.0B | +$18.1B | -$54.7B | +$0.9B | POSITIVE |
| 2026-06-19 | -66.50 | -$162.7B | -$175.1B | +$155.4B | +$18.3B | NEGATIVE |
| 2026-06-12 | +29.75 | +$67.0B | +$65.8B | -$44.6B | -$8.5B | POSITIVE |
Show 51 earlier entries
| Week | URLI | Net Liquidity | Reserves | TGA | RRP | Read |
|---|---|---|---|---|---|---|
| 2026-06-05 | -33.50 | -$20.9B | -$21.4B | +$3.1B | +$24.9B | NEGATIVE |
| 2026-05-29 | -41.50 | -$28.2B | -$39.7B | +$60.7B | -$41.7B | NEGATIVE |
| 2026-05-22 | -23.50 | -$5.7B | -$10.7B | -$25.4B | +$16.3B | NEGATIVE |
| 2026-05-15 | +31.25 | +$70.7B | +$65.9B | -$55.3B | +$3.7B | POSITIVE |
| 2026-05-08 | +58.50 | +$134.9B | +$132.3B | -$125.3B | -$0.0B | POSITIVE |
| 2026-05-01 | -2.00 | +$14.0B | +$4.6B | -$19.1B | -$2.4B | NEUTRAL |
| 2026-04-24 | -39.25 | -$66.3B | -$65.6B | +$82.7B | -$14.7B | NEGATIVE |
| 2026-04-17 | -51.50 | -$210.5B | -$203.3B | +$227.4B | -$5.0B | NEGATIVE |
| 2026-04-10 | +58.50 | +$119.7B | +$119.1B | -$106.5B | +$5.3B | POSITIVE |
| 2026-04-03 | +21.00 | +$46.6B | +$28.4B | -$33.9B | +$5.5B | POSITIVE |
| 2026-03-27 | +29.00 | +$36.9B | +$37.3B | -$38.4B | +$2.8B | POSITIVE |
| 2026-03-20 | -42.25 | -$66.3B | -$74.3B | +$70.0B | +$5.9B | NEGATIVE |
| 2026-03-13 | +38.25 | +$52.7B | +$59.4B | -$41.2B | +$6.0B | POSITIVE |
| 2026-03-06 | -5.00 | +$16.8B | +$9.3B | +$8.0B | -$9.7B | NEUTRAL |
| 2026-02-27 | +41.25 | +$50.4B | +$44.5B | -$49.9B | -$0.1B | POSITIVE |
| 2026-02-20 | +0.50 | +$4.0B | +$1.5B | -$21.7B | +$8.7B | NEUTRAL |
| 2026-02-13 | +12.00 | +$19.9B | +$21.0B | +$2.8B | -$6.2B | POSITIVE |
| 2026-02-06 | +38.25 | +$63.6B | +$54.6B | -$45.0B | -$0.3B | POSITIVE |
| 2026-01-30 | -36.75 | -$82.3B | -$73.6B | +$81.5B | +$3.8B | NEGATIVE |
| 2026-01-23 | -45.25 | -$96.9B | -$105.2B | +$94.1B | +$5.6B | NEGATIVE |
| 2026-01-16 | +29.00 | +$25.2B | +$38.8B | -$6.5B | -$10.5B | POSITIVE |
| 2026-01-09 | +53.00 | +$156.2B | +$169.6B | -$89.3B | -$133.9B | POSITIVE |
| 2026-01-02 | -61.00 | -$152.6B | -$127.1B | +$71.3B | +$140.7B | NEGATIVE |
| 2025-12-26 | +43.75 | +$95.0B | +$46.9B | -$59.9B | -$10.7B | POSITIVE |
| 2025-12-19 | -30.00 | -$38.7B | -$40.1B | +$55.6B | +$0.7B | NEGATIVE |
| 2025-12-12 | +56.00 | +$107.2B | +$95.6B | -$102.7B | -$1.0B | POSITIVE |
| 2025-12-05 | -26.00 | -$25.7B | -$19.8B | +$8.8B | +$0.2B | NEGATIVE |
| 2025-11-28 | -5.50 | -$6.9B | -$19.5B | -$1.2B | +$5.1B | NEUTRAL |
| 2025-11-21 | +26.00 | +$32.2B | +$34.2B | -$42.3B | -$15.1B | POSITIVE |
| 2025-11-14 | +31.00 | +$37.4B | +$31.4B | +$0.4B | -$30.1B | POSITIVE |
| 2025-11-07 | +7.00 | +$21.8B | +$24.0B | -$41.2B | +$5.1B | NEUTRAL |
| 2025-10-31 | -55.25 | -$94.3B | -$101.7B | +$78.8B | +$13.0B | NEGATIVE |
| 2025-10-24 | -42.25 | -$66.6B | -$58.6B | +$53.1B | +$6.5B | NEGATIVE |
| 2025-10-17 | -24.50 | -$44.3B | -$45.7B | +$57.9B | -$7.9B | NEGATIVE |
| 2025-10-10 | +38.25 | +$58.0B | +$54.3B | -$25.3B | -$28.9B | POSITIVE |
| 2025-10-03 | -34.25 | -$58.2B | -$20.1B | +$61.4B | -$24.5B | NEGATIVE |
| 2025-09-26 | -12.00 | +$11.2B | -$20.7B | -$49.2B | +$37.7B | NEGATIVE |
| 2025-09-19 | -51.50 | -$125.5B | -$130.6B | +$139.6B | -$11.4B | NEGATIVE |
| 2025-09-12 | -2.50 | -$16.0B | -$17.0B | +$5.6B | +$14.2B | NEUTRAL |
| 2025-09-05 | -26.00 | -$43.0B | -$48.9B | +$66.1B | -$24.4B | NEGATIVE |
| 2025-08-29 | -44.25 | -$78.9B | -$80.8B | +$69.7B | -$5.9B | NEGATIVE |
| 2025-08-22 | -29.00 | -$32.7B | -$30.7B | +$10.6B | -$3.1B | NEGATIVE |
| 2025-08-15 | +2.00 | -$4.7B | -$2.0B | +$51.2B | -$43.7B | NEUTRAL |
| 2025-08-08 | +35.00 | +$33.2B | +$30.7B | +$44.9B | -$79.8B | POSITIVE |
| 2025-08-01 | -41.25 | -$59.7B | -$58.7B | +$85.9B | -$41.3B | NEGATIVE |
| 2025-07-25 | -1.50 | -$15.3B | -$16.7B | +$21.5B | -$7.7B | NEUTRAL |
| 2025-07-18 | +23.00 | +$31.4B | +$33.0B | +$1.0B | -$35.1B | POSITIVE |
| 2025-07-11 | +48.25 | +$84.9B | +$85.5B | -$61.2B | -$21.4B | POSITIVE |
| 2025-07-04 | -42.75 | -$87.3B | -$90.8B | +$37.7B | +$47.1B | NEGATIVE |
| 2025-06-27 | +24.50 | +$23.6B | +$24.3B | -$49.3B | +$6.9B | POSITIVE |
| 2025-06-20 | -53.00 | -$104.1B | -$106.7B | +$106.8B | +$1.1B | NEGATIVE |
Observed URLI history covers completed weekly runs. Historical percentile ranking uses URLI-Core: the four data-derived components (Net Liquidity, Bank Reserves, Funding Stress, Dollar/Yield Pressure), representing 75% of URLI weight, ranked against frozen weekly FRED history since 2020 and shown in the distribution gauge above. The two policy-judgment components and 13-week live average are outside this percentile lens.
Forward View
Projected URLI — 2026-07-17 estimate
| Item | Estimate | Bias |
|---|---|---|
| Projected URLI point | +46.50 | BULLISH LIQUIDITY BACKDROP |
| Backtested URLI range | +46.50 to +46.50 | SATURATED |
| Uncertainty band: net liquidity | $165.6B to $391.9B | WATCH |
| Range note | URLI band saturated; uncertainty is better read as net liquidity $165.6B to $391.9B. | WATCH |
| Confidence | Model backtest cleared: RMSE $113.2B vs naive $142.9B; hit rate 58.0%. Manual review required for calendar-risk flags. | WATCH |
| Backtest gate | RMSE improvement 20.81% | MODEL |
| Component | Projected Change | Method |
|---|---|---|
| Fed balance sheet | +2.6B | Trailing 4-week mean |
| TGA | -284.0B | Treasury settlements minus maturities |
| RRP | +7.8B | Trailing 4-week mean |
| Net liquidity | +278.8B | Fed BS - TGA - RRP |
Projection track record
| Metric | Value | Meaning |
|---|---|---|
| Scored weeks (N) | 8 | Realized forward projections |
| Directional hit rate | 7/8 | Projected regime sign matched realized |
| Range containment | 4/8 | Realized URLI inside the displayed ±band |
| Avg absolute error | 22.5 pts | Mean |projected − realized| |
| Point bias | -6.0 pts | Mean projected − realized (− = bearish skew) |
Model track record: last 8 completed projections hit 4/8; mean absolute URLI error 22.53.
Assumptions
- TGA projected from Treasury settlements ($266.0B) minus maturities ($550.0B) for the Thursday-Wednesday week.
- Fed balance sheet change carries forward the trailing 4-week mean: +2.6B.
- RRP change carries forward the trailing 4-week mean: +7.8B.
- Projected bank reserves use net liquidity as a reserve-identity approximation; actual reserves can differ.
- Fed rate path, Treasury outlook, funding stress, and dollar/yield scores are held at the latest actual week.
- 2026-07-15 tax-date watch: potential Treasury cash inflow / liquidity drain.
- Scheduled FOMC risk may fall near this projection window; verify the official Fed calendar manually.
Projection is a model-derived scenario with a measured historical error band, not an observed URLI value. It is replaced by actual H.4.1 / TGA / RRP data in the next weekly run.
Next-week liquidity calendar
| Date | Event | Expected Size | Liquidity Effect | Bias |
|---|---|---|---|---|
| 2026-07-13 | 13-week ($92B) and 26-week ($79B) Treasury bill auctions | $171B combined; settlement July 16 | Bill settlement drains cash to Treasury; net effect depends on par of maturing bills vs. new issuance | NEGATIVE |
| 2026-07-14 | June CPI release | N/A | No direct plumbing effect; a hot print would reinforce Fed hike risk (markets already price September as more-likely-than-not) ahead of the July 28-29 FOMC | WATCH |
| 2026-07-14 | 6-week Treasury bill auction | $95B; settlement July 16 | Bill settlement drains cash to Treasury; net effect depends on par of maturing bills vs. new issuance | NEGATIVE |
| 2026-07-15 | Coupon settlement: 3-Year Note ($58B), 9-Year-10-Month Note ($39B), and 29-Year-10-Month Bond ($22B) from the July 7-9 auctions | ~$119B combined settlement | Large coupon settlement drains cash to Treasury -- one of the biggest single-day TGA builds of the month | NEGATIVE |
| 2026-07-15 | 17-week Treasury bill auction | Regular weekly issuance; settlement July 21 | Bill settlement drains cash to Treasury; net effect depends on par of maturing bills vs. new issuance | NEGATIVE |
| 2026-07-16 | 4-week and 8-week Treasury bill auctions | Regular weekly issuance; settlement July 21 | Bill settlement drains cash to Treasury; net effect depends on par of maturing bills vs. new issuance | NEGATIVE |
| Week of 2026-07-11 | Projected TGA drawdown continues: settlements ($266B) vs. maturities ($550B) | Net TGA drawdown of ~$284B projected by the calendar-mechanical model | If realized, injects further reserves into the banking system -- bullish URLI signal; drives the projected URLI to +45.5 (band-saturated) | POSITIVE |
| 2026-07-28 | Next FOMC meeting begins (July 28-29, 2026) | N/A | Rate decision; market pricing now sees a September hike as more-likely-than-not even though the June SEP dot plot's median hike timing pointed to year-end | WATCH |
Alerts & Warnings
| Alert | Status | Notes |
|---|---|---|
| Major injection / drain | NEUTRAL | Net liquidity +59.1B; no breach of the +/-$100B threshold. |
| Reserve shock | POSITIVE | Bank reserves +60.4B; inside the +/-$75B shock band. |
| TGA rebuild risk | WATCH | TGA fell a further -$58.1B on the week to $749.2B as of July 8, a third consecutive weekly drawdown that leaves it roughly $250B below Treasury's own ~$1T (+/- $50B) late-July cash target from the May refunding statement (SB0489). Unlike the prior two weeks, this is no longer a purely two-sided setup: reporting this week confirms Treasury plans marginal increases in bill auction sizes across the curve in July specifically to rebuild the TGA, continuing into the September 15 tax date. The score moves to bill/coupon issuance pressure (-30) from neutral to reflect that the rebuild path is now an announced plan rather than just guidance, even though it has not yet shown up in the TGA level itself. |
| RRP shock | NEUTRAL | RRP +10.0B; below the $50B shock threshold. |
| Fed rate path | NEGATIVE | No FOMC meeting this week; the prevailing stance remains the June 16-17, 2026 hold at 3.50%-3.75% under new Chair Kevin Warsh, with a hawkish SEP (median year-end 2026 rate 3.8%, one hike implied; PCE inflation projected 3.6%). The June statement's language deliberately emphasized delivering price stability over the full-employment mandate. Market pricing has hardened since last week: fixed-income markets now assign roughly a 1-in-4 chance of a July 28-29 hike but see a hike at the subsequent September meeting as more likely than not, with 1-3 hikes probable by December. June payrolls (+57k, weaker than the ~110k consensus) softened hike-risk pricing two weeks ago, but Chair Warsh's guarded Sintra remarks and persistent above-target inflation have since pushed hike odds back up. The Fed's own dot plot is unchanged, so the regime classification holds. Next FOMC is July 28-29, 2026. |
| Funding stress | POSITIVE | FRED-derived: -5.00 bps avg SOFR-IORB (2026-07-02 to 2026-07-09, 5 business days). SOFR traded further below IORB than in the prior week (-0.6bps), its most negative reading in recent weeks; bank reserves jumped +$60.4B to $3.14T, remaining ample. No stress signals in repo markets. |
| Historical significance | POSITIVE | URLI-Core (4 data components, 75% weight) = +42.25 ranks in the 83rd percentile of weeks since 2020 (N=337). |
Market Transmission
| Asset | Bias | Reason |
|---|---|---|
| SPX / QQQ | SUPPORTED | Mildly supportive; index-level liquidity supports multiple expansion. |
| Small caps / breadth | NEUTRAL | Rate-sensitive; needs reserve support and lower yields. |
| BTC / ETH | SUPPORTED | Crypto tracks net liquidity; this week's flow was +$59.1B. |
| High-beta alts | WATCH | Need both a positive URLI trend and BTC leadership to outperform. |
POSITIVE Supportive.
Bull / Base / Bear Scenarios
| Scenario | Liquidity Setup | Market Impact | Confirms / Invalidates |
|---|---|---|---|
| BULL | TGA drawdown resumes; SOMA support continues; yields cool. | Risk assets bid. | Confirms: net liquidity > +$50B. Invalidates: TGA rebuild accelerates. |
| BASE | Flat net liquidity; Treasury supply offsets SOMA. | Choppy, range-bound. | Confirms: stable reserves, calm SOFR. Invalidates: auction stress or USD breakout. |
| BEAR | TGA rebuild + bill supply + higher yields. | Risk-off. | Confirms: TGA spikes with rising yields. Invalidates: TGA drawdown and falling yields. |
Sources & Data Definitions
| Field | Source | Type |
|---|---|---|
| Balance sheet / reserves / RRP / TGA | Federal Reserve H.4.1 | Official |
| Verification series | FRED WALCL / WRBWFRBL / WDTGAL / WLRRAL | Official |
| Fed policy / rate path | FOMC statement & minutes | Official |
| Treasury outlook | Quarterly Refunding Statement | Official |
| Funding stress score | FRED SOFR / IORB — 5-business-day avg SOFR−IORB spread (bps) | Official |
| Dollar/yield score | FRED DTWEXBGS / DGS10 — weekly Δ broad dollar (%) × Δ 10Y yield (bps) | Official |
| Metric | Definition |
|---|---|
| Fed balance sheet | H.4.1 Total assets, weekly point-in-time level. |
| Bank reserves | H.4.1 Table 5 'Other deposits held by depository institutions' (weekly reserve balances). |
| TGA | U.S. Treasury, General Account. TGA down is liquidity positive. |
| RRP | Reverse repurchase agreements. RRP up parks cash at the Fed. |
| Basis | Latest week 2026-07-10; previous week 2026-07-03; H.4.1 levels in $M, displayed in $B. |